The New York City Council has opened an investigation into the marketing practices of four prediction market platforms, including Polymarket, Kalshi, Coinbase and Gemini Titan, over allegations that event-contract firms may use deceptive advertising to attract consumers.
Summary
- New York City Council is investigating the marketing practices of Polymarket, Kalshi, Coinbase and Gemini Titan over allegations of deceptive advertising.
- Council Speaker Julie Menin said the inquiry will examine how prediction markets promote contracts tied to sports, politics, culture and other events.
- The probe follows allegations that Polymarket used content creators in promotions that made simulated trades appear to involve real money.
- The council plans to hold a hearing and consider whether new consumer protection rules or policy changes are needed.
- The inquiry is separate from New York state litigation accusing Kalshi, Coinbase and Gemini of operating illegal gambling businesses.
The office of New York City Council Speaker Julie Menin said Wednesday that the council has been examining allegations of “false, deceptive, unconscionable, and objectionable marketing practices” in the prediction market sector for several months.
Letters sent by Menin to the four companies seek information about how the platforms advertise event contracts covering sports, politics, culture, weather and other subjects. The council also plans to hold a hearing as it considers whether existing consumer protection rules are sufficient or whether new legislation or other policy action is needed.
“Prediction markets aggressively entice consumers to bet and wager on sports, politics, culture, weather, and pretty much anything,” Menin said in a statement. She added that she intends to use the council’s authority to protect New Yorkers from what she described as deceptive and predatory marketing practices.
Prediction market probe focuses on advertising practices
Menin’s letters cited allegations involving Polymarket’s promotional campaigns as one reason for examining marketing across the industry rather than limiting the inquiry to a single company.
A Wall Street Journal investigation published in June alleged that Polymarket worked with content creators on promotions that made it appear they were placing real trades and earning money on the platform even though they were not using their own funds.
The report said some promotional videos used simulated activity to present bets and winnings. In June, crypto.news reported on the CFTC investigation into Polymarket’s business and social media practices after the allegations surfaced.
According to that earlier report, the Journal reviewed 1,105 videos posted between December 2025 and mid-May and found that about 70% involved simulated trades rather than actual market activity. The newspaper estimated that the videos showed roughly $1.9 million in simulated bets, including nearly $900,000 in displayed winnings that would have resulted in losses if the trades had been made on the live platform.
The Journal also alleged that creators received about $2,000 to $3,000 per month through marketing contractor Virality and were instructed not to disclose the sponsorship arrangements. Analytics firm Tubular estimated that the promotional videos generated more than 140 million views across TikTok, YouTube and Instagram.
Following the reporting, the Commodity Futures Trading Commission opened an investigation covering Polymarket’s marketing and other parts of its business, according to Bloomberg and CNBC reports. Polymarket previously said it was conducting an audit of active promotional material to check compliance with company standards and applicable disclosure requirements.
CNBC reported Tuesday that Polymarket has since changed parts of its marketing operation, including introducing updated and streamlined guidelines for employees and content creators working with the company.
Council will examine other prediction market platforms
Rather than treating the Polymarket allegations as an isolated issue, Menin told Kalshi, Coinbase and Gemini Titan that the council wants to determine whether comparable advertising methods have been used elsewhere in the sector.
A memo attached to the letters said the allegations concerning Polymarket created an urgent need to determine whether New York City should pursue legislation or other policy changes. Menin’s office said a council hearing will form part of the inquiry.
The investigation, however, has a narrower scope than the legal disputes already involving several of the companies in New York.
According to the council memo, lawmakers are not investigating whether event-contract exchanges violate New York state gambling laws. The inquiry instead concerns marketing and consumer protection practices, separating the city council process from state litigation over whether certain prediction markets constitute gambling.
“We look forward to engaging with The New York City Council on this matter,” a Polymarket spokesperson said.
Coinbase also defended the regulatory status of its offering when contacted by CNBC.
“Coinbase offers our customers access to federally regulated prediction markets overseen by the CFTC, and fully complies with applicable laws,” a spokesperson said.
Kalshi spokesperson Dani Lever said the company looks “forward to educating the New York City Council about our business model and practices.”
New York cases challenge prediction market regulation
At the state level, New York is already pursuing separate cases against Kalshi, Coinbase and Gemini over their event-contract businesses.
New York Attorney General Letitia James sued Coinbase Financial Markets and Gemini Titan in April, alleging that the companies operated unlicensed prediction market businesses in violation of state gambling and licensing laws. As previously covered by crypto.news, Coinbase moved its case to federal court and argued that the dispute raises federal-law questions because prediction markets fall under CFTC oversight.
Court filings cited in that report showed New York seeking at least $2.2 billion from Coinbase and $1.2 billion from Gemini. State authorities contend that the companies offered event-based contracts without complying with rules that apply to licensed betting businesses in New York.
Coinbase has argued that federal commodities law preempts the state claims. Gemini and Kalshi have similarly maintained that their event contracts operate within a federal regulatory system rather than under state gambling regimes.
Kalshi suffered an early setback in its own New York litigation in July when U.S. District Judge Analisa Torres denied its request for a preliminary injunction. The New York court ruling allowed the state’s case over sports event contracts to continue to the motion-to-dismiss stage.
Kalshi had argued that the Commodity Exchange Act gives the CFTC exclusive authority over its federally regulated contracts. Torres found at the preliminary stage that Kalshi had not shown it was likely to establish that federal law preempted New York gambling rules as applied to its sports contracts.
New York is not currently pursuing comparable litigation against Polymarket, according to the council’s materials.
Polymarket has faced separate questions over U.S. access
Polymarket’s position differs in part because its main international platform has historically restricted U.S. customers following a 2022 settlement with the CFTC.
Under that settlement, Polymarket agreed to pay a $1.4 million civil monetary penalty and wind down markets that did not comply with U.S. law. The company subsequently blocked U.S. users from its main platform.
By April, Polymarket had been seeking CFTC approval to restore U.S. access to its primary prediction market service, with Bloomberg reporting that the company was discussing the restrictions with the regulator.
Polymarket also acquired CFTC-regulated derivatives exchange QCX in 2025 for about $112 million as part of its effort to establish a regulated U.S. operation. Its marketing practices later drew additional federal attention, with Senators Adam Schiff and John Curtis asking CFTC Chair Michael Selig in June for information about advertising standards, influencer disclosures, consumer safeguards and age-verification requirements for prediction markets.
The four companies named in the New York City Council inquiry also maintain substantial ties to the city. Kalshi, Polymarket and Gemini are headquartered in New York City, while Coinbase officially operates from Texas.
Coinbase announced earlier this year that it plans to expand its New York workforce to more than 1,000 employees.
